Agenda item

Report of the Director of Finance. To be introduced by the Cabinet Member for Finance and Corporate Services.

This report will provide an update on the Quarter 2 budget monitoring and Council's financial position. It will seek approval for any changes to the Council's revenue or capital budgets required to respond to the changing financial scenario and the delivery of the MTFS.

The Cabinet Member for Finance and Corporate Services introduced the report which set out the budget update covering the position at Quarter 2 (Period 6) of the 2024/25 financial year including General Fund (GF) Revenue, Capital, Housing Revenue Account (HRA) and Dedicated Schools Grant (DSG) budgets. The report focused on significant budget variances including those arising from the forecast non-achievement of approved Medium Term Financial Strategy (MTFS) savings.

The following issues were outlined by the Cabinet Member:

-       Haringey, amongst other boroughs, continued to face considerable in year demand pressures, particularly in the cost and complexity of delivering adult social care, children’s social care and the rise in costs of securing temporary accommodation for homeless households.

-       The need to continue to be ambitious for the borough and residents despite difficult financial circumstances and maintain the achievements and aims of the Council such as: 98% of all schools good or outstanding,  Children’s services graded ‘Good’ by Ofsted, SEND receiving the highest possible grading, delivering 3,000 new, high quality Council homes by 2031, planting thousands of trees and continuing Haringey Works to provide local employment.

-       Haringey was considered an outer London borough for funding purposes (although inner London for statistical purposes) but has all the pressures of an inner London borough with the additional burden of lower business rates receipts and an average of band C for Council tax.

-       The Housing Revenue Account (HRA) continued to show pressure, caused primarily by the continued high number of void properties, the rising cost of repairs and dealing with damp and mould. This had been mitigated by a reduction in capital spend and some staff vacancies. The HRA budget overspend was still well within the £8m set aside annually for capital investment.

-       The capital programme was under constant review to reduce the revenue implications of any additional borrowing.

-       The Council were working on agreed Budget for 2025/26 and medium-term financial strategy (MTFS). The impact of in-year pressures on next year’s budget and Corporate Delivery Plan were well recognised and officers were working on all measures to reduce demand.

In response to comments and questions from Cllr Cawley- Harrison, the following information was shared.

-       Responding to the remark on the significant and worrying increase in the Council’s budget gap since the last quarterly update report to Cabinet, and concern about the confidence in the budget setting process together with the frequency of budget monitoring reports, it was noted that part of the overspend was due to now better being able to quantify budget risks, particularly in terms of bad debts provision, and housing benefit payment issues. The Director of Finance would be introducing a half year position report to avoid some surprises in the budget forecast going forward. There was also a second piece of work being completed on providing assurance about next year's budget and this was the detailed review on the delivery of savings with more realistic assumptions, which was also now showing an impact in figures contained in the budget quarter one update and budget quarter two update. In addition, the Finance team had used a lot more data evidence benchmarking to really understand trends in demand to also support ensuring there were up to date figures and forecasts. This would be continuing to next year as well, providing a better consistent understanding of the budget position.

-       In further response to the remark on the significant budget gap, it was noted that it was not unusual to have a budget gap at this part of the year but acknowledged that it was unusual to have a budget gap of this size. Assurance was given that work would continue to finalise numbers and there were additions to keep in mind such as the local government settlement expected this week with some additional funding but not the level expected.

-       The Director of Finance outlined that the Council would be continuing to work hard over the next six weeks and examine every single Council budget area almost right up until the point when Overview and Scrutiny Committee papers were published and update further provided.

-       Noted the general position on voids performance which was impacted by the new Council properties coming on stream and they were counted as voids until the tenants moved in.

-       Temporary accommodation shortfall in London was affecting every borough and the good work of services to prevent homelessness so that people moved seamlessly from one property to another mitigated an even more difficult situation was noted. The Council had to contend with the soaring costs of private rented accommodation across London and landlords who were leaving the market due to increased taxation costs. These high price of  TA was not predicted.

-       In response to the question on better reducing temporary accommodation voids, it was important to accept that this had been caused because of a positive action by the Council to acquire more properties to increase availability of TA accommodation. It was recognised that the Council’s in house repairs team did not currently have the bandwidth and capacity to take on all that additional work on TA voids and as a way forward, the Council had contracted out void repair works to let the properties and increase availability. In addition, the Council were also building a new lodge to help reduce hotel costs and this would come forward in the New Year.

The Leader of the Council addressed the broad point made by the Leader of the Opposition on the current significant budget gap and actions being taken to address this as well and reminded the meeting that these pressures in Adults Services and Housing were following 14 years of austerity and Haringey were not the only borough in this position.

RESOLVED

1. To note the forecast total revenue outturn variance for the General Fund of £37m comprising £29.5m base budget pressures and £7.7m savings delivery challenges. (Section 6, Table 1, Table 2 and Appendices 1 & 3).

2. To approve the revenue budget virements and receipt of grants as set out in Appendix 6.

3. To note the net DSG forecast of £2.5m overspend. (Section 6 and Appendix 1).

4. To note the net Housing Revenue Account (HRA) forecast surplus is £4.365m lower than anticipated when the budget was set. (Section 6 and Appendix 2).

5. To note the forecast General Fund and HRA Capital expenditure of £265.748m in 2024/25 (including enabling budgets) which equates to 50% of the total current programme for 2024/25. (Section 8 and Appendix 4).

6. To approve the proposed budget adjustments and virements to the capital programme as set out in Table 3 and Appendices 5 and 6.

7. To note the debt write-offs approved in Quarter 2 2024/25 which have been approved by the Director of Finance under delegated authority, or for those above £50,000, by the Cabinet Member for Finance (Appendix 7) as set out in the Constitution.

Reason for Decision

A strong financial management framework, including oversight by Members and senior management is an essential part of delivering the Council’s priorities as set out in the Corporate Delivery Plan and to meet its statutory duties. This is made more critically important than ever because of the uncertainties, surrounding the Council’s uncertain and challenging financial position, which is impacted by Government funding, high demand for services, particularly for the most vulnerable and the wider economic outlook.

Alternative Options Considered

The report of the management of the Council’s financial resources is a key part of the role of the Director of Finance (Section 151 Officer) in helping members to exercise their role and no other options have therefore been considered.